One analyst said the Fed was "obviously panicked" by the threat of recession....The last time the Fed cut rates as much as three-quarters of a percentage point was in August 1982, almost 26 years ago.

"This is huge," said the BBC's business editor Robert Peston.

"And it is a big risk. If this doesn't work, then people will say they have nothing left in their locker."

The US economy is in recession. It could be a very painful one. With a credit and debt crisis bearing on middle-class Americans, it has the ingrediants of being the worst recession since WWII (there have been 11 recessions since the end of WWII, and this would be the 12th). I don't think US stock markets will react to this shocking rate cut with much enthusiasm. If they interpret the FED as panicking, then the markets will also panic. In this age of hyper-sensitive volatility, today is going to be a messy, high-volume, big loss day.

UPDATE, 16:00 EST: The DOW recovered to close about 128 points lower today. We will see what the next few days bring.